International debt collection, tips & strategies
Recovering outstanding debts is already a challenge in itself, but when it comes to international claims, the complexities become even greater. Language barriers, cultural differences, varying legal systems, and opaque debtors can significantly complicate the process. However, it is crucial for companies operating internationally to have an effective strategy for collecting their outstanding invoices. In this blog, we discuss the key strategies that businesses can apply for successful international debt collection and how a specialized agency like EuroCollect can support them.
1.Understand local legislation and legal procedures
One of the biggest hurdles in international debt collection is the difference in legal systems across countries. What is a standard and accepted collection practice in one country may be completely illegal in another. This means that companies with international debtors must be well informed about the legal context of the respective country.
Why is knowledge of local legislation crucial?
Cross-border debt collection can lead to legal complications because:
Debt collection laws vary by country: In some countries, out-of-court collection procedures are effective and straightforward, while in others, legal action is inevitable.
Differences in statute of limitations: In the Netherlands, an invoice typically expires after 5 years, while in Germany it is 3 years, and in France, it can be up to 10 years. Once an invoice has expired, it can no longer be legally enforced.
Country-specific requirements: Some countries require an official notice of default (such as a “dunning letter”) to be sent before legal proceedings can be initiated.
Different judicial structures: Some countries have fast and efficient procedures for small claims (such as the European Payment Order procedure), while others require much more complex and lengthy processes.
Tips for managing different debt collection laws:
✅ Research the statute of limitations: Check how long a claim remains legally enforceable in each country and take action before the deadline expires.
✅ Be aware of local requirements: In some countries, businesses must send specific documents or notifications before taking legal steps. Ensure compliance with these regulations.
✅ Utilize international treaties: For European collections, the European Payment Order (EPO) can provide a faster and more cost-effective solution for legally pursuing a debtor in another EU country. Outside of Europe, treaties such as The Hague Convention and the New York Arbitration Tribunal play key roles.
✅ Consider local payment practices: In some countries, longer payment terms are common, or negotiating debts is considered a standard practice. This can influence your approach.
✅ Seek legal advice: Partnering with an international debt collection agency like EuroCollect can help avoid legal missteps and improve the chances of successful collection.
Facts & Figures on International Debt Collection
90% of invoices followed up within 30 days are paid. (Source: Atradius Collections)
Unpaid invoices after 90 days have only a 50% chance of being fully collected.
The longer you wait, the lower the chance of payment.
Average payment delays by region:
Northern Europe: 14-30 days
Southern Europe: 45-90 days
Middle East/Asia: 60-120 days
EU countries vary significantly in statute of limitations:
Germany: 3 years
France: 5 years
Netherlands: 5 years
United Kingdom: 6 years
2. Work with a local network of specialists
A strong local presence can make all the difference in international debt collection. Local partners not only understand the legal system but are also familiar with business culture and practices.
EuroCollect works with a global network of collection experts, lawyers, and legal professionals who know exactly which approach works best in a specific region. This ensures that action can be taken quickly and effectively without companies having to navigate complex legal structures themselves.
3. Communication in the Debtor’s Language
Language barriers are one of the biggest challenges in international debt collection. When a debtor receives a letter in a language they do not fully understand, it can lead to miscommunication, delays, or even complete disregard of the claim.
By communicating in the debtor’s native language:
The likelihood of a quick response increases.
The debtor feels better understood and is more likely to cooperate.
Legal threats and payment terms are clearly conveyed.
EuroCollect ensures that all communication is professionally drafted in the correct language to maximize clarity and effectiveness.
Conclusion
International debt collection is complex, but with the right strategies and partnerships, the process can be significantly more efficient. By understanding local laws, collaborating with local specialists, and communicating effectively, you increase the likelihood of successfully recovering outstanding invoices.
EuroCollect offers the expertise and international networks needed to help businesses optimize their debt collection processes worldwide.